What Is a Chief Legal Officer, and Why Your Company Needs One

A chief legal officer (CLO) is an organization’s legal advisor and strategist; helping to minimize risk, recognize opportunities and take advantage of them.

Typically, CLO’s have only been used by large businesses and publicly traded companies, but that is slowly beginning to change. A CLO is just as important to a small business as a large one.

There are now options (Launch) where small and medium sized businesses can take advantage of a lawyer acting as a CLO. Issues with company setup and maintenance, contracts, independent contractors, employees and regulations are present across every sector.

In businesses of every size, issues are rightly handled by a lawyer. However, a Chief Legal Officer does more than just handle legal needs, it is their role to align the company’s strategy with risk management and integrate legal into operationsso a business can be protected proactively and try to avoid litigation. Most importantly, they are an advisor and counselor; a strategic business partner. It is key in the new environment to be proactive rather than reactive. Being reactive is almost always too late – the CLO may be able to fix whatever happened, but fixing a problem is generally much harder than preventing one.

What Does A Chief Legal Officer Do?

Chief Legal Officers are usually thought of as the company lawyer, the person who is responsible for drafting contracts and keeping the company out of legal trouble. However, the role does, and should, extend to far more than that.

What separates CLO’s of today from previous general counsel positions is the focus on them becoming a strategic business partner, a real advisor and counselor, who isn’t solely focused on drafting and reviewing contracts. These days businesses, especially small and medium sized businesses, are more vulnerable. They should rely on a CLO to provide a wide variety of services and advising, such as:

1. Developing and managing company processes and systems (for example a contract management system or an independent contractor management system) in order for the business to be more efficient and profitable.
2. Keeping ownership, or the executive leadership, informing of new or changing laws that may affect or relate to their operations.
3. Establishing guidelines or playbooks for the company, or employees, to understand legal matters and protocols that relate to the company’s operations.
4. Understanding the contracts signed by the company, as well as restrictive agreements, confidentiality and trade secret protection.
5. Implementing, maintaining and managing the hiring/firing processes, employee management and dispute resolution, compliance with regulations and codes in operations.
6. Providing strategic alternatives and ideas on both legal and business issues affected by legal considerations and more of an emphasis on longer-term strategy and putting together the plans to realize the benefits and mitigate the risks.
7. Keeping the company aware of compliance issues and recommending a course of action to remedy such matters and corporate governance.
8. While it is certainly still the responsibility of the CLO to handle the technical legal work that a company needs, it has become extremely important, and valuable, to fully integrate legal into operations and strategic initiatives in an advisory role.

Historically, small and medium sized businesses have only used lawyers after a crisis has occurred, or they are facing a legal dispute. This practice can be counterproductive to risk management and is more expensive and time consuming than a proactive approach.

Chief Legal Officers can be an invaluable addition to a leadership team, especially when organizations are trying to strategize new ways to shift their momentum, enter new markets and reduce potential risks. Whatever the challenge, CLOs bring a valuable perspective to the table, and can mobilize organizations to effectively recognize and take advantage of opportunities.

Technology and new business models, like subscription pricing, now provide small and medium sized businesses with the opportunity to get CLO services once reserved for only large companies. Utilizing a subscription service for a CLO is an opportunity to avoid the issues that come with a traditional lawyer/client relationship for SMB’s - reactive, costly and inefficient.